2017 versus 2018 tax rates: individual income tax rates in 2017 in percentage are 10, 15, 25, 28, 33, 35, and 39.6. The 2018 temporary tax rates percentage are 10, 12, 22, 24, 32, 35, and 37 and will expire on 2025, under H.R.1 “The Tax Cuts and Jobs Act”.
Your income tax return is due on April 17, 2018 since April 15 falls on a Sunday.
1. You are required to file an income tax return if your 2017 gross income reaches:
A. Single: $10,400 (11,950 age 65 or older)
B. Married filing jointly: $20,800 (22,050 age 65 or older, one spouse) (23,300 both spouses)
C. Married filing separately: $4,050 (any age)
D. Head of household: $13,400 (14,950 age 65 or older)
E. Qualifying widow (er): $16,750 (18,000 age 65 or older)
Elderly and blind taxpayers add $1,250 to $1,550.
2. Personal excemptions: $ 4,050 (same in 2016). Phase-outs for personal itemized deduction and personal exemption begins at: single $261,500, head of household $287,650, married filing joint and surviving spouse $313,800, and married filing separate $156,900.
3. Standard deductions: If your combined itemized deductions for interests, taxes, medical and contributions are less than the following amounts, use the following standard deductions:
A. Single: $6,350
B. Married filing jointly: $12,700
C. Married filing separately: $6,350
D. Head of household: $9,350
Elderly and blind taxpayers get an extra $1,250 for married and $1,550 for unmarried.
4. Child tax credit: maximum credit amount is $1,000 per child (consists of refundable and non-refundable components). See Publication 976 for additional information.
5. Education credits: Both credits maybe claimed on the same return but not for the same student.
A. American Opportunity Credit (HOPE): maximum annual credit is $2,500 per eligible student was made permanent and 40% maybe refundable.
B. Lifetime Learning Credit: maximum annual credit is $2,000 per return and is not refundable.
6. Retirement plans limits:
A. IRA contribution limits: $ 5,500 ($6,500 age 50 or older).
B. SIMPLE IRA elective deferral limits: $12,500 ($15,500 age 50 or over).
C. 401(k), 403(b), 457 elective deferral limits: $18,000 ($24,000 age 50 or older).
D. Profit-sharing plan/SEP contribution limits: $54,000 from 53,000 in 2016.
7. Standard mileage rates:
A. Business: 53.50¢ per mile.
B. Medical and Moving: 17¢ per mile.
C. Charity: 14¢ per mile.
8. Long-term care insurance deduction limits: $410 to $5,110 depending on age.
9. Alternative minimum tax (AMT) exemption amount increased. The AMT exemption amount is increased to $54,300 for single and head of household, $84,500 if married filing jointly, $42,250 if married filing separately, and $24,100 trusts and estates (2018 $55,400, $86,200, $43,100, and $24,600, respectively).
10. Foreign earned income exclusion: $102,100 in 2017 and $104,100 in 2018 (earned income include salaries, commissions, bonus, professional fees, tip).
11. Social security taxes for 2017:
A. Minimum earnings to be covered by SS increases to $5,200 from $5,040 ($1,300 per quarter).
B. Maximum earnings allowed for 65 increases to $16,920 from $15,720.
C. Maximum amount subject to FICA increases to $127,200 from $118,500.
D. Early retirement age is 62, full retirement 67 (born 1960 & later).
12. Estate and gift taxes exclusion amount for 2017:
A. Estate/gift tax Exclusion: $ 5,490,000
B. Annual gift tax exclusion: $14,000 per donee ($28,000 split gifts by spouses)
The maximum estate and gift tax rate is 40%.
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Disclaimer: Any accounting, business or tax advice contained in this communication is neither intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.
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Al-os & Associates Accountancy Corporation provides accounting and tax services to individuals, corporations, LLCs and business entities. The Firm has a niche in defending taxpayers audited by the IRS and other governmental agencies.